The Treasury Committee is to investigate the extent and impact of economic crime in the UK, including claims that Russians are using the property market to launder “dirty money”.
The influential House of Commons committee has issued a call for evidence about the scale of money laundering and terrorist financing, and the effectiveness of the current legislative and regulatory infrastructure.
It is also interested in the effect of economic crime on consumers and wants information on the size of the problem, including emerging trends, and what UK institutions are doing to help protect consumers.
“Given the threats that face the UK, the effectiveness of the regimes that we use to protect our financial system from misuse have never been more important,” said Nicky Morgan, chair of the committee.
“It has been claimed that the UK, particularly the London property market, is becoming a destination of choice to launder the proceeds of overseas crime and corruption – so-called ‘dirty money’. One estimate suggests that up to £4.4bn worth of UK properties may have been bought with suspicious wealth.
“As part of our inquiry, the Treasury Committee will examine the UK’s role in international efforts to tackle money laundering and terrorist financing and implement sanctions.”
Last week, anti-corruption campaigner Transparency International called on the UK to end its role as a safe haven for corrupt money from Russia.
In a blog for the charity, research officer Ben Cowdock accused the UK of providing corrupt individuals and repressive regimes with both a safe haven and a place to hide their wealth.
“While clearly not all wealthy Russians in the UK have grown rich by corruption, over the last decade or so, kleptrocrats from Russia have continued to launder unfathomably large sums through the UK – money that has been plundered from state coffers and solicited in bribes,” he said.
“Far from trying to stop this looting, some of the UK’s network of professional enablers have actually provided a helping hand. Our businesses and lax company law have allowed this money to be stolen, our banks process these payments, our property market provides an attractive investment opportunity for these funds, and the financial secrecy available in our Overseas Territories and Crown Dependencies helps hide the paper trail.”
It is difficult to assess exactly how much money laundering is going on in the UK but the National Crime Agency believes that many hundreds of billions of pounds of international criminal money is laundered through UK banks, including their subsidiaries, each year.
It estimates that the cost of money laundering to the UK is £24bn a year, a level that it views as a strategic threat to the UK’s economy and reputation.
The Treasury Committee is also concerned about the level of fraud and scamming that consumers face, which it says is likely to increase as online banking and payments become more prevalent.
“The Office for National Statistics has estimated that there were 3.2 million fraud incidents for the year ending September 2017,” Morgan added. “As millions of customers are exposed to the risk of economic crime, we’ll scrutinise the response of the Treasury, its associated bodies and the regulators, and explore the role that consumer education can play.”
The deadline for submitting written evidence is 8 May 2018.